G.R. No.
172592 July 9, 2008 attorney’s fees thereon,8 and in addition, respondent
SPOUSES WILFREDO N. ONG and EDNA SHEILA
PAGUIO-ONG, Petitioners,
vs.
ROBAN LENDING CORPORATION, Respondent.
AUSTRIA-MARTINEZ,*
DECISION
CARPIO MORALES, J.:
On different dates from July 14, 1999 to March 20, 2000,
petitioner-spouses Wilfredo N. Ong and Edna Sheila
Paguio-Ong obtained several loans from Roban Lending
Corporation (respondent) in the total amount of
₱4,000,000.00. These loans were secured by a real estate
mortgage on petitioners’ parcels of land located in
Binauganan, Tarlac City and covered by TCT No.
297840.1
On February 12, 2001, petitioners and respondent
executed an Amendment to Amended Real Estate
Mortgage2 consolidating their loans inclusive of charges
thereon which totaled ₱5,916,117.50. On even date, the
parties executed a Dacion in Payment Agreement3
wherein petitioners assigned the properties covered by
TCT No. 297840 to respondent in settlement of their total
obligation, and a Memorandum of Agreement4 reading:
That the FIRST PARTY [Roban Lending Corporation] and
the SECOND PARTY [the petitioners] agreed to
consolidate and restructure all aforementioned loans,
which have been all past due and delinquent since April
19, 2000, and outstanding obligations totaling
P5,916,117.50. The SECOND PARTY hereby sign [sic]
another promissory note in the amount of P5,916,117.50
(a copy of which is hereto attached and forms xxx an
integral part of this document), with a promise to pay the
FIRST PARTY in full within one year from the date of the
consolidation and restructuring, otherwise the SECOND
PARTY agree to have their "DACION IN PAYMENT"
agreement, which they have executed and signed today in
favor of the FIRST PARTY be enforced[.]5
In April 2002 (the day is illegible), petitioners filed a
Complaint,6 docketed as Civil Case No. 9322, before the
Regional Trial Court (RTC) of Tarlac City, for declaration
of mortgage contract as abandoned, annulment of deeds,
illegal exaction, unjust enrichment, accounting, and
damages, alleging that the Memorandum of Agreement
and the Dacion in Payment executed are void for being
pactum commissorium.7
Petitioners alleged that the loans extended to them from
July 14, 1999 to March 20, 2000 were founded on several
uniform promissory notes, which provided for 3.5%
monthly interest rates, 5% penalty per month on the total
amount due and demandable, and a further sum of 25%
exacted certain sums denominated as "EVAT/AR."9
Petitioners decried these additional charges as "illegal,
iniquitous, unconscionable, and revolting to the
conscience as they hardly allow any borrower any chance
of survival in case of default."10
Petitioners further alleged that they had previously made
payments on their loan accounts, but because of the illegal
exactions thereon, the total balance appears not to have
moved at all, hence, accounting was in order.11
Petitioners thus prayed for judgment:
a) Declaring the Real Estate Mortgage
Contract and its amendments x x x as null
and void and without legal force and effect
for having been renounced, abandoned,
and given up;
b) Declaring the "Memorandum of
Agreement" xxx and "Dacion in Payment"
x x x as null and void for being pactum
commissorium;
c) Declaring the interests, penalties, Evat
[sic] and attorney’s fees assessed and
loaded into the loan accounts of the
plaintiffs with defendant as unjust,
iniquitous, unconscionable and illegal and
therefore, stricken out or set aside;
d) Ordering an accounting on plaintiffs’
loan accounts to determine the true and
correct balances on their obligation
against legal charges only; and
e) Ordering defendant to [pay] to the
plaintiffs: --
e.1 Moral damages in an amount
not less than P100,000.00 and
exemplary damages of
P50,000.00;
e.2 Attorney’s fees in the amount
of P50,000.00 plus P1,000.00
appearance fee per hearing; and
e.3 The cost of suit.12
as well as other just and equitable reliefs.
In its Answer with Counterclaim,13 respondent maintained
the legality of its transactions with petitioners, alleging that:
xxxx
1
If the voluntary execution of the Memorandum of
Agreement and Dacion in Payment Agreement novated
the Real Estate Mortgage then the allegation of Pactum
Commissorium has no more legal leg to stand on;
The Dacion in Payment Agreement is lawful and valid as
it is recognized x x x under Art. 1245 of the Civil Code as
a special form of payment whereby the debtor-Plaintiffs
alienates their property to the creditor-Defendant in
satisfaction of their monetary obligation;
The accumulated interest and other charges which were
computed for more than two (2) years would stand
reasonable and valid taking into consideration [that] the
principal loan is ₱4,000,000 and if indeed it became
beyond the Plaintiffs’ capacity to pay then the fault is
attributed to them and not the Defendant[.]14
After pre-trial, the initial hearing of the case, originally set
on December 11, 2002, was reset several times due to,
among other things, the parties’ efforts to settle the case
amicably.151avvphi1
During the scheduled initial hearing of May 7, 2003, the
RTC issued the following order:
On appeal,21 the Court of Appeals22 noted that
x x x [W]hile the trial court in its decision stated that it was
rendering judgment on the pleadings, x x x what it actually
rendered was a summary judgment. A judgment on the
pleadings is proper when the answer fails to tender an
issue, or otherwise admits the material allegations of the
adverse party’s pleading. However, a judgment on the
pleadings would not have been proper in this case as the
answer tendered an issue, i.e. the validity of the MOA and
DPA. On the other hand, a summary judgment may be
rendered by the court if the pleadings, supporting
affidavits, and other documents show that, except as to
the amount of damages, there is no genuine issue as to
any material fact.23
Nevertheless, finding the error in nomenclature "to be
mere semantics with no bearing on the merits of the
case",24 the Court of Appeals upheld the RTC decision that
there was no pactum commissorium.25
Their Motion for Reconsideration26 having been denied,27
petitioners filed the instant Petition for Review on
Certiorari,28 faulting the Court of Appeals for having
committed a clear and reversible error

Considering that the plaintiff Wilfredo Ong is not around on I. . . . WHEN IT FAILED AND REFUSED
the ground that he is in Manila and he is attending to a TO APPLY PROCEDURAL REQUISITES
very sick relative, without objection on the part of the WHICH WOULD WARRANT THE
defendant’s counsel, the initial hearing of this case is reset SETTING ASIDE OF THE SUMMARY
to June 18, 2003 at 10:00 o’clock in the morning. JUDGMENT IN VIOLATION OF
APPELLANTS’ RIGHT TO DUE
Just in case [plaintiff’s counsel] Atty. Concepcion cannot PROCESS;
present his witness in the person of Mr. Wilfredo Ong in
the next scheduled hearing, the counsel manifested that II. . . . WHEN IT FAILED TO CONSIDER
he will submit the case for summary judgment.16 THAT TRIAL IN THIS CASE IS
(Underscoring supplied) NECESSARY BECAUSE THE FACTS
ARE VERY MUCH IN DISPUTE;
It appears that the June 18, 2003 setting was eventually
rescheduled to February 11, 2004 at which both counsels III. . . . WHEN IT FAILED AND REFUSED
were present17 and the RTC issued the following order: TO HOLD THAT THE MEMORANDUM
OF AGREEMENT (MOA) AND THE
The counsel[s] agreed to reset this case on April 14, 2004, DACION EN PAGO AGREEMENT (DPA)
at 10:00 o’clock in the morning. However, the counsels are WERE DESIGNED TO CIRCUMVENT
THE LAW AGAINST PACTUM
directed to be ready with their memorand[a] together with
COMMISSORIUM; and
all the exhibits or evidence needed to support their
respective positions which should be the basis for the
judgment on the pleadings if the parties fail to settle the IV. . . . WHEN IT FAILED TO CONSIDER
case in the next scheduled setting. THAT THE MEMORANDUM OF
AGREEMENT (MOA) AND THE DACION
EN PAGO (DPA) ARE NULL AND VOID
x x x x18 (Underscoring supplied)
FOR BEING CONTRARY TO LAW AND
PUBLIC POLICY.29
At the scheduled April 14, 2004 hearing, both counsels
appeared but only the counsel of respondent filed a
The petition is meritorious.
memorandum.19

By Decision of April 21, 2004, Branch 64 of the Tarlac City Both parties admit the execution and contents of the
RTC, finding on the basis of the pleadings that there was Memorandum of Agreement and Dacion in Payment. They
no pactum commissorium, dismissed the complaint.20 differ, however, on whether both contracts constitute
pactum commissorium or dacion en pago.

2
This Court finds that the Memorandum of Agreement and
Dacion in Payment constitute pactum commissorium,
which is prohibited under Article 2088 of the Civil Code
which provides:
The creditor cannot appropriate the things given by way of
pledge or mortgage, or dispose of them. Any stipulation to
the contrary is null and void."
The elements of pactum commissorium, which enables
the mortgagee to acquire ownership of the mortgaged
property without the need of any foreclosure
proceedings,30 are: (1) there should be a property
mortgaged by way of security for the payment of the
principal obligation, and (2) there should be a stipulation
for automatic appropriation by the creditor of the thing
mortgaged in case of non-payment of the principal
obligation within the stipulated period.31
In the case at bar, the Memorandum of Agreement and the
Dacion in Payment contain no provisions for foreclosure
proceedings nor redemption. Under the Memorandum of
Agreement, the failure by the petitioners to pay their debt
within the one-year period gives respondent the right to
enforce the Dacion in Payment transferring to it ownership
of the properties covered by TCT No. 297840.
Respondent, in effect, automatically acquires ownership of
the properties upon petitioners’ failure to pay their debt
within the stipulated period.
Respondent argues that the law recognizes dacion en
pago as a special form of payment whereby the debtor
alienates property to the creditor in satisfaction of a
monetary obligation.32 This does not persuade. In a true
dacion en pago, the assignment of the property
extinguishes the monetary debt.33 In the case at bar, the
alienation of the properties was by way of security, and not
by way of satisfying the debt.34 The Dacion in Payment did
not extinguish petitioners’ obligation to respondent. On the
contrary, under the Memorandum of Agreement executed
on the same day as the Dacion in Payment, petitioners
had to execute a promissory note for ₱5,916,117.50 which
they were to pay within one year.35
Respondent cites Solid Homes, Inc. v. Court of Appeals36
where this Court upheld a Memorandum of
Agreement/Dacion en Pago.37 That case did not involve
the issue of pactum commissorium.38
That the questioned contracts were freely and voluntarily
executed by petitioners and respondent is of no moment,
pactum commissorium being void for being prohibited by
law.39
Respecting the charges on the loans, courts may reduce
interest rates, penalty charges, and attorney’s fees if they
are iniquitous or unconscionable.40
This Court, based on existing jurisprudence,41 finds the
monthly interest rate of 3.5%, or 42% per annum
unconscionable and thus reduces it to 12% per annum.
This Court finds too the penalty fee at the monthly rate of
5% (60% per annum) of the total amount due and
demandable – principal plus interest, with interest not paid
when due added to and becoming part of the principal and
likewise bearing interest at the same rate, compounded
monthly42 – unconscionable and reduces it to a yearly rate
of 12% of the amount due, to be computed from the time
of demand.43 This Court finds the attorney’s fees of 25%
of the principal, interests and interests thereon, and the
penalty fees unconscionable, and thus reduces the
attorney’s fees to 25% of the principal amount only.44
The prayer for accounting in petitioners’ complaint
requires presentation of evidence, they claiming to have
made partial payments on their loans, vis a vis
respondent’s denial thereof.45 A remand of the case is thus
in order.
Prescinding from the above disquisition, the trial court and
the Court of Appeals erred in holding that a summary
judgment is proper. A summary judgment is permitted only
if there is no genuine issue as to any material fact and a
moving party is entitled to a judgment as a matter of law.46
A summary judgment is proper if, while the pleadings on
their face appear to raise issues, the affidavits,
depositions, and admissions presented by the moving
party show that such issues are not genuine.47 A genuine
issue, as opposed to a fictitious or contrived one, is an
issue of fact that requires the presentation of evidence. 48
As mentioned above, petitioners’ prayer for accounting
requires the presentation of evidence on the issue of
partial payment.
But neither is a judgment on the pleadings proper. A
judgment on the pleadings may be rendered only when an
answer fails to tender an issue or otherwise admits the
material allegations of the adverse party’s pleadings.49 In
the case at bar, respondent’s Answer with Counterclaim
disputed petitioners’ claims that the Memorandum of
Agreement and Dation in Payment are illegal and that the
extra charges on the loans are unconscionable.50
Respondent disputed too petitioners’ allegation of bad
faith.51
WHEREFORE, the challenged Court of Appeals Decision
is REVERSED and SET ASIDE. The Memorandum of
Agreement and the Dacion in Payment executed by
petitioner- spouses Wilfredo N. Ong and Edna Sheila
Paguio-Ong and respondent Roban Lending Corporation
on February 12, 2001 are declared NULL AND VOID for
being pactum commissorium.
In line with the foregoing findings, the following terms of
the loan contracts between the parties are MODIFIED as
follows:
1. The monthly interest rate of 3.5%, or
42% per annum, is reduced to 12% per
annum;
3
 2. The monthly penalty fee of 5% of the appropriate the things given by way of pledge or
total amount due and demandable is mortgage, or dispose of them. Any stipulation to the
reduced to 12% per annum, to be contrary is null and void
computed from the time of demand; and
The elements of pactum commissorium, which enables
3. The attorney’s fees are reduced to 25%
the mortgagee to acquire ownership of the mortgaged
of the principal amount only.
property without the need of any foreclosure
Civil Case No. 9322 is REMANDED to the court of origin proceedings, are: (1) there should be a property
only for the purpose of receiving evidence on petitioners’ mortgaged by way of security for the payment of the
prayer for accounting. principal obligation, and (2) there should be a stipulation
for automatic appropriation by the creditor of the thing
mortgaged in case of non-payment of the principal
obligation within the stipulated period.
Ong v. Roban Lending Corporation,
Here, Memorandum of Agreement and the Dacion in
GR No. 172592, July 9, 2008, 557 SCRA 516
Payment contain no provisions for foreclosure
proceedings nor redemption. Under the Memorandum of
FACTS: On various dates, petitioner Spouses Wilfredo
Agreement, the failure by the petitioners to pay their debt
N. Ong and Edna Sheila Paguio-Ong obtained several
within the one-year period gives respondent the right to
loans from respondent Roban Lending Corporation in the
enforce the Dacion in Payment transferring to it
total amount of P4, 000,000. These loans were secured
ownership of the properties covered by TCT No. 297840.
by real estate mortgage on Spouses Ong‘s parcel of
Respondent, in effect, automatically acquires ownership
lands.
of the properties upon Spouses Ong's failure to pay their
debt within the stipulated period.
Later Spouses Ong and Roban executed several
agreements - an amendment to the amended Real
In a true dacion en pago, the assignment of the property
Estate Mortgage which consolidated their loans
extinguishes the monetary debt.
amounting to P5, 916,117.50; dacion in payment wherein
spouses Ong assigned their mortgaged properties to
Here, the alienation of the properties was by way of
Roban to settle their total obligation and Memorandum of
security, and not by way of satisfying the debt. The
Agreement (MOA) in which the dacion in payment
Dacion in Payment did not extinguish Spouses Ong's
agreement will be automatically enforced in case
obligation to Roban. On the contrary, under the
spouses Ong fail to pay within one year from the
Memorandum of Agreement executed on the same day
execution of the agreement.
as the Dacion in Payment, petitioners had to execute a
promissory note for P5, 916, 117.50 which they were to
Spouses Ong filed a complaint before Regional Trial
pay within one year
Court of Tarlac City to declare the mortgage contract,
dacion in payment agreement, and MOA void. Spouses
Ong allege that the dacion in payment agreement is
pactum commissorium, and therefore void. In its Answer
with counterclaim, Roban alleged that the dacion in
payment agreement is valid because it is a special form
of payment recognized under Article 1245 of the Civil
Code. RTC ruled in favor of Roban, finding that there was
no pactum commissorium. The Court of Appeals upheld
the RTC decision.

ISSUE: Whether or not the dacion in payment agreement

entered into by Spouses Ong and Roban constitutes
pactum commissorium

HELD: The Court finds that the Memorandum of

Agreement and Dacion in Payment constitute pactum
commissorium, which is prohibited under Article 2088 of
the Civil Code which provides that the creditor cannot

4
EN BANC
[G.R. No. 46326. February 14, 1940.]
C. H. HODGES, recurrente, contra CAMEN
REGALADO Y MARIA GAY, recurridas.
Sres. Gibbs y McDonough en representacion del
recurrente.
Sres. Hilado, Lorerlzo y Hilado en representacion de
la recurrida Carmen Regalado.
El recurrente promovio este proceso de certiorari para
pedir la revision y modificacion de la sentencia dictada por
el Tribunal de Apelacion, el 10 de agosto de 1938,
fundandose en las razones que expresa en su alegato.
Los hechos relacionados con las cuestiones que el
recurrente plantea, son en sintesis como
sigue:chanrob1es virtual 1aw library
Las recurridas Carmen Regalado y Maria Gay celebraron
un contrato con el recurrente, el 14 de junio de 1928 para
comprar del ultimo tres parcelas, situadas dos de ellas en
el municipio de Iloilo, y una en el municipio de Bago,
siendo conocidas aquellas en el catastro del mencionado
municipio de Iloilo, como lotes 210-B y 4280-B, y siendo a
su vez conocida la ultima en el catastro de Bago, como
lote 8123. El precio convenido de las tres, fue el de
P17,362.80 pagadero dentro del plazo de 10 años
contados desde el otorgamiento de la escritura de
Compraventa (Exhibit 1), hasta el 13 de junio de 1938,
mas sus intereses a razon de 1 por ciento al mes,
pagaderos a su vez semestralmente, por adelantado, en
la inteligencia de que si no se pagasen dichos intereses,
serla exigible al momento, el pago integro del precio de
compra. En la mencionada escritura de compraventa,
Exhibit 1, consta que las partes que la otorgaron,
estipularon, entre otras cosas, que se tenga por cierto que
las recurridas pagaron en la misma fecha del
otorgamiento de la escritura, por adelantado, los intereses
de la expresada suma de P17,362.80, correspondientes
al periodo comprendido entre el 13 de junio de 1928 y 31
de diciembre del mismo año; "that the said vendees shall
be let into immediate constructive possession of the above
described properties, and shall have the right to collect
rents from any occupants thereof from and after the date
of this agreement; that the said vendees obligate
themselves to maintain the properties above described in
good condition, to make and keep in repair the buildings
and improvements existing on the parcels of land above
described situated in the municipality of _______, and
keep the same insured against loss by fire in a sum not
less than P_____ and to pay the premiums therefor
whenever same become due and payable; that they shall,
likewise, pay promptly all taxes and assessments that may
be now due or hereafter become due and payable on the
properties described in paragraph one and two of this
agreement and each of them; that time is of the essence
of this agreement, and should the vendees fail to make
payment of the purchase price, interest, taxes or
assessments, premiums on insurance, or should they fail
to comply faithfully with each and every obligation herein
agreed upon in accordance with the terms of this
agreement, any such failure shall constitute such a breach
of this agreement as to make the entire amount of the
purchase price remaining unpaid to become forth-with due
and payable, and any violation whatsoever shall give the
vendor the right to enforce payment of the total amount of
the purchase price, together with interest and charges
immediately, in which event an additional sum equal to ten
per cent (10%) of the purchase price shall be added and
paid to cover attorney’s fees for enforcing payment; or
should the vendor so determine he may rescind this
agreement and be thereby relieved from all obligation or
responsibility thereunder, and in that event all payments
made on account of the purchase price, or interest, repairs
or improvements, shall be retained by and be for the
benefit of the vendor, and shall be considered as rents for
the use of the properties by the vendees prior to the
breach of this agreement, and all payments made on
account of taxes or assessments, insurance premiums
and the like shall also be for the benefit of the vendor, and
the vendees shall have no claim for same or any part
thereof; that it is expressly agreed that should the vendees
fail to make any payments as herein required for taxes,
assessments, repairs, insurance premiums and the like in
accordance with the terms of this agreement, payment
thereof may be made by the vendor, and charged to the
account of the vendees and said payments shall bear
interest from date hereof in the same manner and the
same rate as the purchase price, it being expressly
understood and agreed that payments thus made by the
vendor shall in no way affect his right to enforce payment
of the purchase price or to rescind the agreement as he
may see fit; that should the vendor determine to rescind
this agreement on account of the breach of the terms
thereof by the vendees, then the latter shall deliver
immediately the possession of all the properties and each
of them to the vendor, and should judicial action become
necessary to obtain possession of the said properties or
either of them from the vendees, or any one holding under
them, the sum of five hundred pesos (P500) shall be paid
by the vendees to the vendor for attorney’s fees in said
action." (Clausulas 6, 7, 8, 9 y 10 del Exhibit 1.)
Habiendo transcurrido tres años desde la fecha del
otorgamiento de la escritura Exhibit 1 sin que las
recurridas pagasen al recurrente nada a cuenta del precio
de compra de los inmuebles de que se trata, ni a cuenta
de los intereses que se obligaron a pagarle, dicho
recurrente decidiopromover contra las mismas, la causa
civil No. 9794 del Juzgado de Primera Instancia de Iloilo,
intitulada Hodges contra Regalado y Gay, para pedir la
rescision de su contrato de compraventa Exhibit 1; la
restitucion a el de la posesion de los referidos inmuebles
y el pago a el, tambien, de la cantidad de P175.66 en
concepto de alquiler de aquellos, desde el 14 de diciembre
de 1931 mientras los mismos no le sean restituidos.
Dictose sentencia en dicha causa, contra las recurridas
que fueron declaradas en rebeldia, rescindiendo el
5
contrato de compraventa, Exhibit 1, y ordenando a las
mismas a restituir al recurrente la posesion de los
referidos inmuebles, a pagarle en concepto de alquiler de
los mismos la suma de P175.66 al mes, desde el 14 de
diciembre de 1931 hasta que aquellos le sean restituidos,
y a pagarle tambien la cantidad de P100 en concepto de
honorarios de abogado, ademas de las costas del juicio.
Esto fue en 22 de junio de 1934.
Antes de esto, sin embargo, o sea el 13 de mayo de 1931,
el recurrente presento a las recurridas un estado
demostrativo de sus cuentas, siendo copia del mismo el
Exhibit C que es de este tenor:
STATEMENT OF ACCOUNT
13, 1931, to December 13, 1931 in advance 1,041.77
————
Balance 7,492.05
We, the undersigned, hereby certify that the foregoing
statement is true and correct and to our full satisfaction.
We hereby notify the documents we signed before Notary
Public Mr. Rosauro R. Borromeo referring to the
P7,492.05 negotiation with you we having read and
understood them thoroughly before we signed them. Also
the document of ____ which I obligate myself to buy from
you the properties both in _____ to my entire satisfaction.

Messrs. MARIA GAY & CARMEN REGALADO Yo, el abajo firmante, lo certifico que el estado de cuenta
arriba detallado es verdadera y correcta y a mi entera
To May 13, 1931 satisfaccion.

El que suscribe ratifica que el documento firmado ante el

Balance unpaid P17,362.80 P3,993.49 Notario Publico Sr. Rosauro R. Borromeo referente a la
cantidad de P7,492.05 negociado con Vd. lo he firmado
MONEY ADVANCED ON VARIOUS ACCTS. despues de haber leido entendido. Asi como tambien el
documento _____ por el cual me obligo a comprar de Vd.,
5/23 — 1929 taxes 13.09 3.08 ambas propiedades estan en ______ , todas a mi entera
satisfaccion.
5/23/30 — 1930 taxes 389.09 45.39
Conforme:chanrob1es virtual 1aw library
2/10/31 — per statement below 862.33 27.03
(Fdas.) CARMEN REGALADO
2/10/31 — per statement below .70 .02
MARIA GAY
2/10/31 — per statement below 76.50 2.40
Witnessed by:
5/12/31 — 1931 taxes 56.97 04
FIRMA ILEGIBLE
——— ———
FIRMA ILEGIBLE"
P18,761.48 P4,071.45
Al mismo tiempo que esto hacia el recurrente, requirio a
18,761.48 las dos recurridas que otorgasen a su favor el pagare
Exhibit A, que representa el saldo que muestra en su faz
———— el mencionado Exhibit C. Copiado literalmente, dice el
referido pagare, Exhibit A, lo siguiente:chanrob1es virtual
Total account 5/13/1931 P22,832.93 1aw library
Less 17,362.80 P7,492.05 ILOILO, P.I., May 13, 1931
———— On or before June 13, 1938 for value received, we or either
of us, jointly and severally promise to pay to C. N. Hodges
5,470.13 or order in his office in the city of Iloilo, P. I., the sum of
P7,492.05 Philippine currency with the interest at the rate
Attorney’s fees P200.00 of one per cent per month until paid, interest payable
yearly. The makers, sureties, endorsers and grantors of
Cash advanced 480.00 this note, hereby severally waive presentment for
payment, notice of non-payment, protest and notice of
Registration fees 20.00 protest and diligence in bringing suit against any party
hereto, an consent that time of payment may be extended
Interest on pawn tickets 280.15 without notice to or consent of sureties, endorsers or
grantors of this note. If not paid when due we severally
Interest on contract dated June 14, 1928 from June

6
agree to pay all costs and expenses of collection including
attorney’s fees of ten per cent of the principal and interests
hereon. It is hereby agreed that if default be made in
payment of interest when due and payable punctually on
the first day o each and every month following, this note
with accrued interest thereon shall at once become due
and payable.
It is further agreed that if default be made in the payment
of principal or interest of this note as when same becomes
due and payable, an additional sum equal to PP700 shall
be paid to the holder or holders hereof as attorney’s fees
and costs of collection.
And, it is further agreed that if interest of this note is not
paid punctually when due on the date as above stated then
the unpaid interest shall be added to the capital hereby
secured and will bear interest at like rate, until paid.
This note is one of a series of ____ notes, each of like
amount and even date herewith for the total sum of P
_____
(Fdas.) CARMEN REGALADO
MARIA GAY
Para su mayor resguardo, el recurrente requirio tambien
en la misma fecha, 13 de mayo de 1931, a la recurrida
Carmen Regalado, a otorgar como en efecto ella otorgo,
a su favor, una escritura de hipoteca para garantizarle el
pago de la cantidad indicada en el pagare Exhibit A,
siendo dicha escritura la que obra en autos, como Exhibit
B. Entre las condiciones impuestas a dicha recurrida en
esta ultima escritura, hay estas que
siguen:jgc:chanrobles.com.ph
"Dicha deudora hipotecaria se convino ademas, a pagar
la cantidad especificada en el pagare arriba descrito con
los intereses en el mencionados, segun las condiciones
men cionadas en el mismo, y tambien pagara por su
cuenta en el dia de su vencimiento todas las cargas y
contribuciones que pesaren sobre dichos bienes aqui
hipotecados, o los que se han de Imponerse sobre dichos
blen s ob et s de la pre sente hipoteca.
Conviene _____ deudor ____ hipotecaria ____ en que
hara asegurar los bienes hipotecados contra el riesgo de
perdida o detrimento por efectos de incendio o accidente,
por el periodo de un año a contar desde la fecha actual,
en cual quier compañia o cualesquiera compañias de
seguros sean aceptables al acreedor hipotecario, en una
cantidad que no sea menos que el precio de compra, de
dichos bienes; que vera a que se haya de pagar al
acreedor hipotecario, segun pueda constar el interes de
esta, cualquier indemnizacion de perdida que haya con
arreglo a la poliza o polizas de seguro; y conviene ademas
____ referid ____ hipotecari ____ en que no entregarse
dentro de los cinco dias subsiguientes al otorgamiento de
esta hipoteca tal poliza o tales polizas de seguro
endosadas a favor del acreedor hipotecario, podra este, si
asi lo conviene, efectuar tal seguro por cuenta de ____
deudor. hipotecari ____ y que cual esquiera cantidad o
cantidades desembolsadas por el acree dor hipotecario a
ese efecto quedaran en seguida debidas y exigibles y se
agregaran al adeudamiento principal garantizado por la
presente hipoteca y devengaran intereses al mismo tipo.
Queda estipulado por la presente que el acreedor
hipotecario, o su representante debidamente autorizado,
tendra en todo tiempo el derecho de inspeccionar los
susodichos bienes, y que si se vendiesen o diesen en
prenda o cediesen cualesquiera de dichos bienes, sin que
a ello consintiera la acreedora hipotecaria, o si se
embargasen los mismos sea preventivamente sea con
arreglo a sentencia judicial o bien si dejase ___ deudor
____ hipotecari ___ de satisfacer al acreedor hipotecario
en el dia de su vencimiento adeudamiento cualquiera
incurrido por respuesto, equipo, o reparaciones
suministrados y efectuados en relacion con los bienes
hipotecados o independientes de ellos, entonces vencera
y quedara ____ pagadero desde luego el pagare ____
arriba consignado ____ que no se hayan pagado, asi
como cuantos intereses hayan devengado sobre ____
mismo ___ Estipulase ademas que de no quedar
satisfecha la precitada obligacion o parte cualquiera de
ella, como y cuando venza la misma, podra la acreedora
hipotecaria tomar inmediatamente y retener la posesion
de todos los susodichos bienes ____ y proceder a hacer
efectivo esta hipoteca de la manera que en derecho
proceda.
Las condiciones de esta obligacion son tales que si ___
deudor ____ hipotecari ____ sus herederos albaceas,
administradores, a causahabientes, cumplen bien y
fielmente con las obligaciones arriba expresadas de
conformidad con los terminos de las mismas, quedara
nula y de ningun efecto la presente obligacion.
Otorgada en Iloilo, I. F., hoy 13 de Mayo de 1931.
(Fdos.) CARMEN REGALADO
C. N. HODGES
En presencia de:
(Fdos.) H. COOPER
P. BALAGUER, SR.
Nosotros Carmen Regalado y C. N. Hodges, este ultimo
C. N. Hodges, acreedor hipotecario, individualmente
juramos que la enterior hipoteca esta otorgada con el fin
de garantir las obligaciones especificadas en las
condisiones de la misma, y no para otro fin, y que la misma
es una obligacion justa y que no ha sido otorgada con el
objeto de fraude.
(Fdos.) CARMEN REGALADO
C. N. HODGES
7
ESTADOS UNIDOS DE AMERICA
ISLAS FILIPINAS }s.s
En este 20th dia de maye de 1931, en la Provincia de
Iloilo, Islas Filipinas, personalmente comparecio ante el
que suscribe Carmen Regalado, without cedula being a
woman, Y C. N. Hodses con su cedula No. F-1440667
expedido en Iloilo el dia 6 de enero de 1931, quienes doy
fe ser las mismas personas que han firmado y otorgado la
hipoteca que procede y habiendo reconocido ante mi ser
esto un acto de libre voluntad y otorgamiento, y que la
declaracion jurada que precede fue firmada y reconocida
ante mi en cuanto a su exactitud.
(Fdos.) ROSAURO R. BORROMEO
Notario
Mi comision expira el dic. 31,1932
Reg. Not. No. 28; Pag. No.
Libro No. VI; Serie de 1931.
El 14 de marzo de 1934, el recurrente cuyo credito contra
las recurridas no solamente no habia sido pagado hasta
entonces, total o parcialmente, pero ni siquiera lo fueron
sus intereses o algunos de los abonos que dijo haber
estado haciendo por ellas, y que por dicha razon su
referido credito habia ascendido, hasta entonces, a
P10,235.16, puso pleito a la recurrida Carmen Regalado,
en esta causa mientras se hallaba aun en el Juzgado de
Primera Instancia de Iloilo para requerirla a pagarle la
expresada suma mas sus intereses al 12 por ciento al año,
mas tambien la suma adicional de P700 en concepto de
honorarios de abogado y gastos de cobranza,
procediendo de hecho a ejecutar la hipoteca que tenia a
su favor. Seguidos los tramites ordinarios del juicio, la
causa fue resuelta adversamente al recurrente por el
Tribunal de Apelacion al que habia recurrido para apelar
contra la sentencia del Juzgado de origen, declarandole
con derecho solamente a cobrar de la demandada
Carmen Regalado la cantidad de P1,871.48 mas los
intereses legales de dicha suma desde la fecha de la
interposicion de su demanda y nada mas. Contra esta
sentencia, el recurrente promovio este proceso
de certiorari.
El recurrente pretendio que su alegado credito de
P10,235.16 lo constituian las siguientes cantidades:
P7,492.05 — valor del pagare Exhibit
2,472.3 — intereses no pagados de P7,492.05
correspondientes a los affos 1932 y 1933, segun
los terminos del pagare Exhibit A y de la escritura
de hipoteca Exhibit
}
235.38 — impuestos por amillaramiento sobre la finca
hipotecada segun el Exhibit B, abonados por el,
(recurrente); y
35.37 — intereses de la indicada cantidad de P235.38.
———
Total P10,235.16
La recurrida Carmen Regalado, para defenderse, alego
en su contestacion que la escritura de hipoteca Exhibit B
y el pagare a que alude son nulos y de ningun valor,
porque se consignan en ellos cantidades imaginarias
Publico excepto la de P480 que es el "cash advance" mencionado
en el Exhibit C; y que las transacciones habidas lo mismo
antes que despues del otorgamiento de dicha escritura de
hipoteca Exhibit B, excepto la relacionada con la
expresada cantidad de P480, son todas de caracter
40
usurario.
Las conclusiones del Tribunal de Apelacion respecto a la
cuestion asi suscitada por la recurrida Carmen Regalado
son que la cantidad de P7,492.05 a que el pagare Exhibit
A se refiere, no representa la que real y verdaderamente
habia recibido del recurrente, y que la misma no esta
integrada sino por las cantidades que dicho recurrente
habia estado imputandole en su cuenta, segun se data en
el Exhibit C de que al principio se ha hecho mencion y
aparece ademas copiado literalmente paginas atras.
Habiendo pedido el recurrente la rescision de su contrato
de compraventa Exhibit 1, el 24 de marzo de 1934; y
habiendo obtenido una sentencia que le concede la
rescicion pedida, el 22 de junio del mismo año, parece
claro que, como lo ha declarado el Tribunal de Apelacion,
el recurrente no tiene derecho a cobrar, no ya los
P10,235.16 que reclama en su demanda, pero ni siquiera
los P7,492.05 que constituyen la cuenta inicial aludida en
el pagare Exhibit A. Obro indudablemente con mucho
acierto el Tribunal de Apelacion al declarar que el
recurrente no tiene derecho a cobrar sino a lo sumo
P1,871.48, de los cuales P1,321.48 constituyen el total de
las cantidades que el recurrente habia abonado en
concepto de impuestos por amillaramiento sobre las
fincas mencionadas en el Exhibit 1, en virtud de los
terminos de dicha escritura. Las otras cantidades son
estas:chanrob1es virtual 1aw library
P50 por honorarios de abogado, y no P200 como se data
A. en el Exhibit C, porque si bien es verdad que el cheque
Exhibit D (por P200), expresa que fue librado a favor de la
recurrida Carmen Regalado para abonar lo que ella debia
por honorarios de abogado, dicho cheque,
inmediatamente despues de habar sido librado, fue
endosado al abogado del recurrente, Sr. Borromeo, y este
a su vez lo endoso a dicho recurrente, dando esto a
entender que la mencionada cantidad no era para ningun
B. abogado sino para el recurrente mismo. Sobre este
8
extremo, la sentencia del Juzgado inferior, confirmada por
el Tribunal de Apelacion, dice lo siguiente: "El Sr.
Borromeo es el abogado del demandante, y este pago
esta relacionado con la redaccion de la escritura de
hipoteca (Exhibit B), base de la presente accion. Dicha
escritura esta redactada bajo un formulario impreso, y el
abogado Sr. Borromeo no ha hecho mas que llenar los
blancos de dicho formulario y ratificar la escritura como
Notario Publico. El Juzgado cree que el pago de P200
hecho, aparentemente, al abogado Sr. Borromeo, por su
trabajo de redactar el Exhibit B, y su derecho como
Notario de la ratificacion del mismo documento, es
excesivo, y un pago de P50 seria una compensacion
razonable. Por lo tanto, debe descartarse del Exhibit C la
partida de P200 y sustituirla con la cantidad de P50." Esta
conclusion no es asbitraria; esta fundada en las
consideraciones que constan en la decision del Tribunal
de Apelacion, y que se acaban de transcriber;
P480 dinero en efectivo que la recurrida Carmen
Regalado admitio haber recibido del recurrente; y
P20 por derechos de registro que el recurrente abono
porla mencionada recurrida, en relacion con la escritura
de hipoteca Exhibit B.
preferencia a conseguir la rescision; de otro modo, no
hubiese entablado su demanda en la causa No. 9794,
sobre rescision.
Lo expuesto hasta aqui demuestra cuan infundado es el
primer error atribuido al Tribunal de Apelacion, pues de
hecho declaro que el Exhibit A no tiene fuerza de obligar
a las recurridas por la razon de que los conceptos que
expresa son en su mayor parte imaginarios, y contrarios.
a los propositos de la ley contra la usura, y porque esta
unalado ademas, por su misma demanda de rescision.
Debe notarse que alli se imputan intereses sobre
intereses al mismo tipo en que los primeros se han
estipulado, no obstante no haber habido nunca convenio,
ni expreso ni tacito, de que cobresan de las recurridas.
Esto es con trario a la ley, porque como dice el articulo
1109 del Codigo Civil, los intereses solo han de devengas
interes desde que son judicialmente reclamados.
Demuestra tambien lo infundado que se el segundo error
atribuido al mencionado Tridunal, porque las
consideraciones aqui expuestas que son en substancia
las mismas que tuvo en cuenta dicho Tribunal, prueban a
las claras que el Exhibit C es un estado demonstrativo de
cuentas cuyo proposito es cobrar de las recurridas mucho
mas de lo que estaban y estan obligadas a pagar.

La razon por que el recurrente no tiene derecho a cobrar Los otros errores atribuidos al Tribunal de Apelacion son
sino la expresada cantidad de P1,871.48 es la de qwue, consecuencia de los dos primeros que ya quedar
habiendo optado por la rescision de la escritura de resueltos. Tampoco tienen razon de ser porque toda su
compraventa Exhibit 1, — resicion que le fue concedida base consiste en la proposicion de que se cometieron los
por sentencia de 22 de junio de 1934 la causa No. 9794, dos primeros errores ya mencionados.
o sea 1 año 3 meses y 12 dias antes de obtener la
sentencia para la revision de la cual promotivo el presente Por todo expuesto, confirmamos la decision y fall del
proceso — , no le esta permitodo obtener a la vez las dos Tribunal de Apelacion, con las costas al recurrente, en las
cosas: la ressicion del contrato Exhibit 1 y la ejecucion de tres instancia. asi se ordena.
su hipoteca Exhibit B; no solamente porque son
imaginarias as cantidades expresadas tanto en dicho
Exhibit B como en el Exhibit C; sino tambien porque segun
el articulo 1295 del Codigo Ciil, la rescision obnliga a la
devolcion de las cosas que fueron objecto del contrato con
sus frutos, frutos que en el caso de autos no existen, —
por lo menos, no la ha halldo asi el Tribunal de Apelacion
— , y del precio con sus intereses, que tampoco existe,
porque, sugundo lo da a entender la referida decision del
Tribunal de Apelacion, nada pagaron las recurridas,
excepto otorgando escritura o el contrato Exhibit 1. Por
otra parte, se dice en el articulo 1255 del mismo cuerpo
legal que si es verdad que la voluntad de las partes es la
alma de todo contrato, tambien es verdad que no pueden
establecer pactos clausulas o condiciones que sean
contrarias a las leyes, a la moral o al orden publico, como
son los que el recurrente impuso a la recurrida Carmen
Regalado, segun constan en los contratos Exhibits A yB,
a sabiendas de que antes del otorgamiento de los
mismos, ya existia el Exhidit 1. Ademas, es de inferir que
el recurrente renuncio a cobra intereses,desde el
momento en que interpuso su demanda de rescision;
pues, es de notar que su demanda para cobrar interes de
presento el dia 14 de marzo de 1934, y su demanda para
pedir la rescision se presento 10 dias despues, o sea el
24 de marzo de 1934. Este ultimo hechodenota
claramente su renuncia a cobrar intereses, o su